Court rulings illustrate that 'open booking' pitfalls are real

Q: In your last column, you noted a serious legal problem with "open booking": By allowing employees to use the public websites and mobile apps offered by suppliers and online travel agencies, travelers and their employers must agree to the website's terms and conditions that make them waive all of the contractual and other legal rights that they normally have under U.S. law. I am wondering whether this is more of a hypothetical issue than a real problem. Specifically, have any courts ruled on the website disclaimers that you cite? Also, if the corporate employee agrees to the supplier's website's terms and conditions, will the employer really be bound as well?

A: The answer to both questions is yes: The courts have nearly always held that travel website terms and conditions bind the user, and the courts have held that a corporate employee can bind the corporation to website terms and conditions.

With respect to the first point -- binding the user himself -- an illustrative case is Burcham v. Expedia, a 2009 Missouri federal court case, in which a customer sued the online agency alleging that it had misrepresented the amenities at a Hampton Inn. The plaintiff claimed that he had never seen or agreed to the website's terms and conditions and that, even if they bound him, the clause requiring that all lawsuits be brought only in King County, Wash., was unenforceable.

The court held that the customer was bound by the website's terms and conditions by virtue of clicking "I Agree" during the signup process, although the court also noted that it was not strictly necessary to include an "I Agree" button if the terms and conditions were clearly called to the customer's attention before a sale took place.

The court upheld the exclusive forum clause, too. So the court dismissed the customer's case because it was brought in the wrong state, effectively ridding Expedia of the suit because it would have been too burdensome for Burcham to sue in Washington state.

With respect to the second point -- binding the corporate employer -- a typical case is Hugger-Mugger v. Netsuite, a 2005 Utah federal court decision holding that an employee had "ostensible authority" to bind his employer to Netsuite's terms and conditions, even though the employee had no authority to sign contracts. The court noted that the employee was authorized "to provision the account -- that is, to do what was necessary to begin the implementation process."

In my view, a traveler or travel arranger who used the corporation's name, address or corporate credit card number in the sign-up process would most likely be viewed as having authority to bind the corporation to the website's terms and conditions, not only in one transaction but probably in all future transactions by himself and other traveling employees.

Even if a traveler used only his personal information and personal credit card, a court still might find that the traveler bound his employer, if the record in the case also showed that the corporation expressly permitted or encouraged its employees to make their travel arrangements using the public website.

So open booking's legal problem is not merely hypothetical, and if it proliferates, it is probably only a matter of time before a corporation is held to be bound by a public website's onerous terms and conditions.

Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at mark@pestronk.com.